Sony IR Day 2018
Imaging Products & Solutions SegmentMobile Communications Segment
May 22, 2018
Shigeki IshizukaCorporate Executive Officer, Executive Vice President,
Officer in charge of Imaging Products & Solutions Business/Mobile Communications BusinessSony Corporation
Representative Director and PresidentSony Imaging Products & Solutions Inc.
Sony IR Day 2018
Introduction Imaging Products & Solutions SegmentMobile Communications Segment
Shigeki IshizukaCorporate Executive Officer, Executive Vice President,
Sony Corporation
Sony Imaging Products & Solutions Inc.
Shigeki IshizukaRepresentative Director and President
Mobile Communications SegmentImaging Products & Solutions Segment
Toru KatsumotoHiroshi Kawano
Representative Director and Deputy President
Sony Mobile Communications Inc.
Mitsuya KishidaRepresentative Director and President
Sony Network Communications Inc.
Hirokazu TakagakiPresident and
Representative Director
Sony IR Day 2018
Agenda
1. Imaging Products & Solutions Segment
2. Mobile Communications Segment
3. Reference Materials
Ishizuka
Ishizuka/Kishida
Imaging Products & Solutions SegmentMobile Communications Segment
Sony Corporation Investor RelationsSony IR Day 2018
1. Imaging Products & Solutions Segment
Sony IR Day 2018
Organization: Sony Imaging Products & Solutions Inc.
Digital Imaging Group Professional Solutions and Services Group
Medical Business Group
Professional Products Group
Imaging Platform: Light to DisplayLight Source DisplayLens Image Sensor g
Image Processing
IPTransmission
FeliCaBusinessDivision
DSC
ILC
Camcorder
LensMedia
SportsEducation
Cinema
Visual Simulation
NetworkCamera
DisplayBroadcastingSystem
Peripheral Medical Devices
Life Science
Surgical Imaging Devices
ProfessionalCamcorder
Imaging Products & Solutions Segment
Sony IR Day 2018
FY2017 Review
Sales and operating income increased significantly due to therecovery from the Kumamoto Earthquakes and the impact of forex
Digital Imaging: continued shift to higher value-added, especially in the interchangeable lens camera spaceProfessional Solutions: new solutions service business offset by decrease in existing business sales
OperatingIncome
Sales 579.6
47.3 74.9+27.7655.9
Factor1 2 4
Positive factorsForex impact
Recovery from the Kumamoto Earthquakes(insurance income, sales recovery)Increased value-added (shift to higher value-added models)
Negative factors
FY2017 Operating Income (vs FY2016)
FY16 FY17
(bln yen)
1
2
3
3
Increased Value-Added
Recovery from the
Earthquakes
4 Increase in OPEX(due to increase in sales)
Forex Impact
OPEX
Imaging Products & Solutions Segment
Factor Factor Factor
Sony IR Day 2018
FY2018 Forecast
OperatingIncome
Sales 655.9
(bln yen)
74.9 75+0.1
660
FY17 FY18April forecast
Red: negative factorBlue: positive factor
Forex impactImprovement in value-added (shift to higher value-added models)
FY2018 Operating Income (vs FY2017)
1
2 Improvement in Value-Added
Foreximpact
Imaging Products & Solutions Segment
Factor21
Factor
Sony IR Day 2018
Mid-Range Plan: Management Policy
Business Foundation・ Sony brand(B2B&C)
Strengthen products & services under the SONY brand
・ Customerʼs Real-Time BenefitCreate customer value with “time”
・ Differentiation by L2D technologyCompetitive advantage derived edge from in-houseproduction technology
Customer Real-Time Benefit
Differentiation byL2D Technology
+SIPS
Strength
Sony Brand(B2B&C)
Quantitative Target
Operating Income Margin: 10% or More
* L2D: Light to Display
*
Imaging Products & Solutions Segment
Sony IR Day 2018
ProductsSolutions
Mid-Range Plan: Business Strategy
TechnologyPF
Create strong products based on our differentiated L2D technology
Strengthen and grow the Solutions Business by delivering Real-Time Benefit
*1 L2D: Light to Display
*1
*2 PF: Platform
Imaging Products & Solutions Segment
Light Source
DisplayLensImage Sensor
Image Processing
IP Transmission
Sony IR Day 2018
FY2020 Financial Targets
Operating Income: 85~105 billion yen
Maximize profit growth and enterprise valueCreate strong and differentiated products based on L2D technology, deliver Real-Time Benefit, and strengthen and grow the solutions business
※ Sales Amount (For Reference): 700 billion yen
Imaging Products & Solutions Segment
Sony IR Day 2018
Digital Imaging Business: Mid-Range Initiatives
Industry Trends Initiatives
Win in an increasingly competitive market and continue to generate high profit
Aim to be the top brand in the overall camera market Strengthen products, especially in the
interchangeable lens camera space Engage the professional market Expand the lens business
Revitalization of the mirrorless camera market
Competitors becoming more aggressive in the market
Expand Lens Lineup Expand Pro-Support Worldwide
Speed
“Camera of the Year” Camera Grand Prix
2018
Basic Resolution
Imaging Products & Solutions Segment
Sony IR Day 2018
Professional Solutions Business: Sales by Business
Broadcasting System
Professional Camcorder
NetworkCamera
Display
Services &Solutions
Media
Sports
B2BEducation, theater,
visual simulation, etc
Imaging Products & Solutions Segment
Sony IR Day 2018
◆
FY17Actual
◆
FY20Target
・ Develop products which use our L2D technology・ Reduce fixed costs in existing businesses
<Solutions>enhance solutions that deliver Real-Time Benefit
<Products>enhance differentiation and rebuild a stable
profit structure
Sales
OP Margin
■︓Product Sales ■︓Solutions Sales◆︓Professional Solutions Business OP Margin
Full Size Cinema CameraCineAlta “VENICE”
・ Real-time solutions that leverage IP & cloud・ Expand in the sports and B2B arena・ Develop 5G solutions
8K System Camera“UHC-8300”
Proprietary Micro LEDCrystal LED
Imaging Products & Solutions SegmentProfessional Solutions Business: Mid-Range Growth Targets
Sony IR Day 2018
Industry Changes andUnderstanding of Challenges Action Plan
■ Changes in the media industry- Rise of the OTT market, industry consolidation and
greater reliance on IP and the cloud ⇒ Greater demand for cost reduction and efficiency
- Full-scale demand for 4K and 8K(Start of satellite and IPTV 4K broadcasting)
- Coming 5G era
■ Growing new market for B2B■ Improving profitability
- Develop 4K & IP products and solutions- Develop technology for the 5G era - Pursue the sports and education markets- Revise our product and business portfolio so
as to better adapt to changes in the industry- Continuous cost reduction and operational
transformation
Examples of Solutions Businesses
Remote Integration “REMI” Learnings Solution “Vision Exchange”
Imaging Products & Solutions SegmentProfessional Solutions Business: Mid-Range Initiatives
Stadium Data CenterControl Room
Network
Sony IR Day 2018
Time
Profit Margin
Life ScienceBusiness
(Research)
Surgical ImagingDevice Business
Life ScienceBusiness
(For Research and Clinical)
Transition from single-device business to high value-added business
Transition from single-device business to high value-added business
Transition from research device business to medical device business
Transition from research device business to medical device business
Printer
Monitor
IP Converter
Cell Analyzer Cell Sorter4K Surgical Endoscope System
Surgical Microscope with 4K 3D Capabilities
Peripheral MedicalDevice Business
SOMED &SolutionsBusiness
Imaging Products & Solutions SegmentMedical Business: Mid-Range Strategy
Sony IR Day 2018
FY2020 Financial Targets
Operating Income: 85~105 billion yen
Maximize profit growth and enterprise valueCreate strong and differentiated products based on L2D technology, deliver Real-Time Benefit, and strengthen and grow the solutions business
※ Sales Amount (For Reference): 700 billion yen
Imaging Products & Solutions Segment
Sony Corporation Investor RelationsSony IR Day 2018
2. Mobile Communications Segment
Sony IR Day 2018
Operating loss recorded due to impairment chargeNegative impact of unit sales decrease and sharp increase in component costs were offset by cost reductions; full-year profit was recorded on an operational basis
2
3
4
Smartphone unit sales decrease1(FY16 14.6M → FY17 13.5M units)
Sharp increase in component costs
Improvements in operational efficiency
Negative impact of foreign exchange rates
5 Impairment
FY16 Actual
OperatingIncome
Sales
2 4
-6.5 3.7(excluding
impairment)
1 3
759.110.2
5
-27.6
723.7
FY17 Actual
FY2017 Overview Mobile Communications Segment
(bln yen)
Sony IR Day 2018
FY17Actual
OperatingIncome
Sales
2 4
+12.6 -15
1
Smartphone unit sales decrease
3
723.7
-27.6
(FY16: 13.5M → FY17 FCT: 10.0M units)
Improvements in operational efficiency
Positive impact of foreign exchange rates
640
FY18 April Forecast
Impairment
FY2018 Operating Results Forecast
2
3
4
1
Year-on-year profitability improvement by shifting away from less profitable modelsand engaging in continuous operating expense reductions
Mobile Communications Segment
(bln yen)
Sony IR Day 2018
Recurring Revenue Business: Stable Profit Structure & Next Steps
FY14 FY15 FY16 FY17
CAGR 7%
• Network quality improvements driving customer satisfaction
• Deploying NURO services to more regions
Devices
SmartHome Healthcare Transportation
Fixed Line Communication Business: Cumulative Subscribers
Going beyond being just an internet service providerMid-Term Vision
Call Centers Data Centers Network*LPWA: Low Power Wide Area
Mobile Communications Segment
CloudLPWA※
Deep Learning
Technology
Sony IR Day 2018
Smartphone Business: Review (Accomplishments)
Operating Expenses (billion yen) Warranty-Related CostsForecast from FY15
Actual
-58%
Accelerated reduction through continuous pursuit of further efficiencies
(150 using
FY16 FX rates)
Significant reductions through quality improvements
Mobile Communications Segment
Sony IR Day 2018
Smartphone Business: Review (Outstanding Issues)
Issue: not improving product lineup fast enough⁻ Mid-term product planning
and development⁻ Design and development lead
time
Unit Sales (million units)
Mobile Communications Segment
Forecast from FY15
Actual
Sony IR Day 2018
FY2018 Business DirectionLean Transformation for Future Growth
FY2018 Business DirectionLean Transformation for Future Growth
Reduce operating expenses & lower break-even point
Smartphone Business: Business Direction
Product SalesManufacturing, Procurement,
Operations
Add to strength and efficiency by leveraging the assets, business know-how and infrastructure of the Sony Group
Mobile Communications Segment
Mid-Term VisionCreating New Value to Customers for the 5G Era
Sony IR Day 2018
Smartphone Business: Key Issues
Product Development Process: Rebuild and Improve EfficiencyProduct Development Process: Rebuild and Improve Efficiency
Enhance Product Offerings: Fully Utilize Sonyʼs Technological AssetsEnhance Product Offerings: Fully Utilize Sonyʼs Technological Assets
Design Sensing Battery
Audio Display Wireless Data Transmission Mechatronics
Camera Lens
Mobile Communications Segment
Sony IR Day 2018
Strategic Direction for the 5G Era Mobile Communications Segment
Sony IR Day 2018
FY2018 Business DirectionLean Transformation for Future Growth
FY2018 Business DirectionLean Transformation for Future Growth
Reduce operating expenses & lower break-even point
Smartphone Business: Business Direction
Product SalesManufacturing, Procurement,
Operations
Add to strength and efficiency by leveraging the assets, business know-how and infrastructure of the Sony Group
Mobile Communications Segment
Mid-Term VisionCreating New Value to Customers for the 5G Era
Sony IR Day 2018
Smartphone Business: Sales & Operation Enhancements
Project Europe
Strategic partnerships with operatorswhile bolstering open channel sales
Key Actions• Technological collaboration including
5G launch• Realize efficiencies through the
integration of Sonyʼs electronics sales operations
• Enrich product lineup through entertainment propositions
ManufacturingHigher efficiency realized by automated line introduction
Service evolution through quality improvement
ProcurementCreate long-term partnerships
as “One Sony”
LogisticsUtilize Sonyʼs global network
Accelerate blockchain initiatives
SalesSales Manufacturing, Procurement, Operations
Manufacturing, Procurement, Operations
Mobile Communications Segment
Sony IR Day 2018
Smartphone Business: Operating Expenses & Break-Even point
Rebuild product development process and significantly improve efficiency
Leverage Sony Group business know-how and infrastructure to bolster design, manufacturing, sales and operations
-30%
Transformation into a Lean BusinessTransformation into a Lean Business
OPEX
Mobile Communications Segment
Sony IR Day 2018
MC Segment: Summary
Recurring Revenue Business: Realizing solid growth by leveraging stable customer base
Smartphone Business: Create a lean, agile business without an excessive focus on revenue and
units sold Build a sustainable business structure through ʻOne Sonyʼ initiatives Steadily implement initiatives to bolster and prepare for the future
Creating New Value to Customers for the 5G EraCreating New Value to Customers for the 5G Era
FY2020 Target: OP: 20~30 billion yenSales Level: 670 billion yen (reference only)
Mobile Communications Segment
Sony IR Day 2018
Reference Materials
Imaging Products & Solutions Segment
Sony IR Day 2018
FY2017 Sales by Business Category
Sales650
bln yen
FY2017 Sales by Geographic Area
Sales650
bln yen
Still and Video Cameras
Other
Digital Imaging
Professional
Medical
Imaging Products & Solutions SegmentIP&S Sales by Business Category and Geographic Area
China
Asia
Other
Japan
U.S.
Europe
Sony IR Day 2018
ILC (Incl. Lens): 19% (#3)(#1 in Mirrorless Camera)
DSC: 26% (#2)(#1 in Premium DSC*1)
Sony20%
FY2017 Still Camera Market FY2017 Video Camera MarketMarket Size: 1,400 bln yen
ソニーシェア29%
Market Size: 390 bln yen
*1 Premium DSC = DSC with large (1/1.7 inch and over) image sensors or high zoom (20x and over)Source: Sony
Components of Video Camera Pie ChartVideo cameras for consumer(POV + Conventional)
Video cameras for business(Pro-sumer + Professional)
Imaging Products & Solutions SegmentIP&S Key Product Market Share (Revenue Basis)
Sony29%